Scrap shredders are hungry machines, with
owners willing to vary their diets if it will keep the beasts
well fed and profitable. Expect shredders to be on the prowl
for material that in the past might have ended up as No. 2
bundles or mixed aluminum castings, executives said at
AMM's Scrap Conference in November.
Some of the biggest shredders are now being
installed in China, and some conference attendees speculated on
whether China might begin importing vehicle hulks, crushed but
unshredded, from the United States. That would make domestic
shredder operators very unhappy. The consensus view Not quite
"The reason why we're shredding so many
different types of material is that we add more value by
shredding than we did when we processed with a shear and a
torch," said Scott Newell, chairman of Shredder Company LLC,
As a maker of the fragmentizers from a family
that arguably invented them, he took an upbeat view of
shredders expanding their role still further, estimating that
U.S. steel mills get 30 to 35 percent of their scrap intake in
Randy Ehret, manager of strategic sourcing at
Timken Co., which owns two mills making specialty products,
said fragmentized scrap accounts for 43 percent of his
company's scrap purchases, amounting to 45,000 long tons a
month. Trailing far behind in second place is busheling at 10
percent of the mix. He cautioned that 43 percent is an average.
For some products, the melt will use zero shredded scrap. Such
material has an attractive density, he said, but needs policing
to minimize the residual percentage of copper.
Ehret said that Canton, Ohio-based Timken
works closely with suppliers to ensure that the chemistry of
the shredded meets Timken's standards, which can be quite fussy
for some products.
Does one help the scrap consumer by feeding
the shredder subtler material than vehicles and white goods,
then splitting the commingled material into streams with
high-tech sorting equipment? That issue was raised during a
question-and-answer period at the conference in Scottsdale,
Ariz. "If we shred materials that are low-residual, and now
they're mixed with high-residual shreddables, doesn't that
really dumb down the scrap supply, from a chemical point of
view," the conference participant asked Newell.
"If you want to make low-copper residuals,
you have to select the type of material that you're shredding,"
Newell acknowledged, but he argued that the process is more
efficient. He said the ultimate test is whether mills prove
willing to pay more for the shredded version of a particular
mixture or for the unshredded.
He noted that his company had helped supply a
$100-million shredder plant in Xuzhou, China, for Jiangsu
Fengli Group Co. Ltd., which plans three more such facilities
elsewhere in the country. Annual processing capability at
Xuzhou is more than 1 million tonnes, with a 10,000-horsepower
"Twice now, I've said to the (Chinese) guy
who bought a shredder from me, 'How are you going to get enough
scrap to process?' He said 'don't worry about that, we already
have that much scrap.' It will be a while before they get to
shredding automobiles as a main diet, (but) 1.4 billion people
throwing away cans creates a lot of tonnage," Newell said.
He recalled that his Chinese customer did ask
for the names of U.S. scrap dealers that might export
unshredded material. "I dodged that one," Newell said, to avoid
irking U.S. shredder operators who are his customers.
Newell said he doesn't expect scrap industry
consolidation to benefit the participants as much as steel
mergers did. "The biggest driver to this is to reduce
competition and to increase margins. But when the margins
increase, as we all know, it encourages other people to
invest," he said. "Investment-wise, the entry level to the
scrap industry is much lower" than in steelmaking.
Small shredders and large shredders can
coexist, in his view, by using different market strategies.
Newell said he recently sold a $4-million shredder, with 1,500
horsepower, to a U.S. yard located close to a megashredder.
"This guy can make money with 4,000, 3,000, even 2,000 tonnes a
month," Newell said, adding that the smaller players must serve
a particular niche, processing material that draws higher
prices when fragmentized than when not.
A more skeptical view of shredder growth,
also voiced at the conference, is that the industry is
saturated with such equipment. Experience has established what
shredders are useful for and there are more than enough of them
to handle those functions.
Such skepticism was voiced in a paper from
scrap processor David J. Joseph Co. presented at the
AMM conference by David Hodory, Joseph's director of
marketing and communications.
"Building more and bigger shredders does not
expand the supply of scrap to shred. (The) market is already
over-served from a shredder capacity/utilization perspective,"
the David J. Joseph document said. "Demand has been at
near-record levels for 10 years," the paper said about obsolete
scrap. "Backlogs are gone, the reservoir depleted."
As for prompt manufacturing scrap, its
availability is barely affected by how much the yards will pay
for it, the analysis said. "High prices do not provide
incentive to make more defective hoods, door panels, etc.,"
Newell, hoping for growth, sees yet more
shredders as a way to make scrap processing more efficient,
with fewer bounces and fewer intermediaries. "There are many,
many steps from where a piece of scrap originates until the
time it gets into an electric furnace. It's picked up and set
down, picked up and set down, processed and set down, then
transported and set down," he said.
Newell would like to see shredded scrap
moving 10 rail cars at a time on a single bill of lading. Even
truckload movement could become more efficient if mills would
accept nighttime delivery and let the trucks dump the
fragmentized scrap near the destination furnace, he said.